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For payment plans, credit cards on file mean payments on time

For any patients on a payment plan, having a credit card on file is just good business, says a New Jersey practice administrator.

Automatic card payments are the only way an office can be assured of getting the agreed-upon amount at the agreed-upon time.

The practice administrator uses that approach for a dermatology practice and also for a second practice she manages as a consultant. It’s a logical thing to do, she says. When the office has already sat through several billing cycles without being paid, “why get back into the waiting game?” If somebody hasn’t paid up to now, there’s no reason to think the money will start coming in on time just because there’s a payment plan.

A benefit, but with a limit

The administrator offers patients the plan by explaining that instead of paying the full amount all at once, they can break it up into automatic monthly card payments. Then she asks how much the amount should be and what day the charge should go through so it doesn’t hit at a bad financial time.

The amount depends on the circumstances, she says. For a single mother who’s out of work, the office is lenient. There is a limit, however. The office doesn’t settle for $10 a month. Also, if the patient doesn’t have a credit card, the office gets postdated checks.

Most people have no objection to having card charges made at regular intervals, but if someone is hesitant, her response is that “it’s no different than giving a card for a hotel reservation.” She also tells patients that while it’s new for a medical office to keep a card on file, most businesses do it routinely.

The key to success, she says, is to be human about it. There’s no form letter. Instead, she meets with the patient and explains that “we understand your situation, we want to help you, and we are willing to work with you. We are trying not to send this account to collections.”

But she also explains that if there’s no payment resolution, the bill will have to go to a collection agency, “and then it’s out of our hands.” That usually ends the matter “because people don’t want to go to collections.”

Meeting and setting up plans that accommodate individual circumstances is time-consuming, she admits, but it’s necessary to maintain good relations. What’s more, the economy demands compassion. “People never thought they would be unemployed.”

She adds that the cards are a last resort. When an account does go to collections, the office discharges the patient.

That person “has no intent to pay,” she says, so there’s little reason to continue the relationship. No business “can let people float and run up tabs.”

Cards for two situations

The card plans are used in two situations.

One is overdue accounts. After two regular statements, the office sends a letter outlining the overdue bill, and if there’s no response, there’s a phone call of “We haven’t received payment. If it’s easier for you, this is what we would like to do.”

The other situation is potential hardship. A card plan gets offered at the outset when it appears a patient will have difficulty paying the bill.

That happens, for example, when there’s a large unmet deductible and the service is somewhat expensive. At the first visit, she explains that because of the large deductible, the patient may want to take advantage of the regular card payments.

She does the same if a bill could add up significantly as when a treatment is expected to last a while. She presents it as “we’re looking at a long treatment period, and it adds up. Let’s stay on top of this so there’s not a huge debt in six months.”

A simple daily charging task

To track the charges, the offices use nothing more than an expandable file with slots numbered from 1 to 31 for the days of the month. Each patient’s paperwork showing the amount to be billed goes into whatever day of the month the charge is to go through.

Every morning the billing manager simply pulls out the forms for that date and runs the card charges through.

While the information could be kept electronically, the office opted for the paper file “because it’s all right there.”

And the results are good.

Last summer, the second practice she manages had more than $100,000 in outstanding receivables, many of them as much as three years old.

The calls and the meetings were time-consuming, but the office has now collected a large percentage of those receivables—even some of the very oldest accounts. And by using the card plans with current accounts, it has significantly improved the ongoing revenues.

But not for all patients

It’s possible to offer on-file card payments to all patients, she says, but she has opted not to do so.

Routinely asking for a card is impersonal and gives the impression the office doesn’t trust people to pay. It can also be insulting to somebody who does pay, because it raises the question of “why don’t they think I’m going to pay my $50?”

The card plan is best received when offered as a benefit, or a way to help somebody avoid collections. And to somebody who doesn’t have a payment issue, “it’s not a benefit at all.”

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